Payback period is the period a company needs to recover its initial investment. A company needs to purchase an equipment and they are analyzing two options.

1. Equipment Alpha costs $180,000 and will increase their cash flow $30,000 per year. This equipment has an expected life of 15 years, and its salvage value is $0. 2. Equipment Beta costs $360,000 and will increase their cash flow $45,000 per year. This equipment has an expected life of 20 years, and its salvage value is $0.

Determine the payback period for equipment Alpha.

Determine the payback period for equipment Beta.